Pro Teck: Rising Metro Home Prices Hitting Middle Class
Pro Teck Valuation Services, Waltham, Mass., said rising home prices in major metropolitan areas is causing economic displacement–in some cases, driving out middle-class home buyers.
The company’s Home Value Forecast noted economic displacement appears to be particularly acute in the San Francisco Bay Area, where job growth and rising home prices have combined to squeeze middle-class home buyers. Over the past five years alone, more than 500,000 jobs were created in San Francisco with limited additions to the housing supply.
Pro Teck CEO Tom O’Grady said because of the natural laws of supply and demand, housing prices in San Francisco have skyrocketed, pushing many people farther out to find a home. The average home in the metro is $1.2 million, and the prices are forecasted to rise, making the San Francisco real estate market out of reach for many.
“This isn’t a new problem for San Francisco, just one that has been exacerbated by the real estate crash,” O’Grady said. “New housing starts tanked for three and a half years after 2008, leaving much to room to make up.”
The displacement has extended far and wide in the Bay Area. The report examined Antioch, Calif., a community 40 miles east of San Francisco (roughly the difference between Washington, D.C. and Baltimore) to gauge how dramatic the displacement has been.
Antioch’s real estate market has yet to recover from the housing crisis, O’Grady said, in part because of conditions prior to the crash.
“Pre the 2008 housing crisis, Antioch’s real estate market was fueled by the high availability of non-traditional home loan products,” O’Grady said. “Zero-down or low down-payment mortgages were very popular before the housing crisis in Antioch, with loan-to-value averages hitting 97 percent by Q4 2006.”
Post-2008, Antioch remains a community in transition,” O’Grady said. “After the foreclosure crisis many homes in the community were bought and rented out as investment properties, leading to more temporary residents. Today, the number of REO sales has returned to pre-crash levels and prices have begun to rebound. As more families make permanent homes in Antioch, home prices should continue to rise.”
Pro Tech’s Top 10 metro areas in April for home prices:
–Stockton-Lodi, Calif.
–Yuba City, Calif.
–Boise City, Idaho
–Boulder, Colo.
–Portland, Ore.
–Sacramento, Calif.
–Salt Lake City, Utah
–San Antonio
–San Diego
–Seattle
Bottom 10 CBSAs in April:
–El Paso, Texas
–McAllen, Texas
–Killeen-Temple, Texas
–Longview, Texas
–Midland, Texas
–Charlottesville, Va.
–Hagerstown, Md.
–Rockford, Ill.
–Atlantic City, N.J.
–Jacksonville, N.C.
